Jamie P. Estrada
As Chinese President Hu Jintao completes his state visit to the United States, my fellow New Mexicans should consider this key fact: For four of the last 10 years, China was New Mexico’s number one export market, supporting thousands of jobs.
New Mexico manufacturers exported billions of dollars in electronic parts to China for final assembly. And each year, the Chinese consume millions of pounds of pecans from southern New Mexico during Chinese New Year celebrations.
But you’d never know that given the barrage of political attack ads by both Democrats and Republicans this past election cycle. While bashing China and other countries may score political points, doing so hurts our ability to build the international ties necessary for the United States to create jobs from increased exports and new foreign investment – and also distracts us from the debating the issues that will actually help America compete globally.
Holding China accountable
There’s no doubt that serious problems exist in the U.S.-China commercial relationship – from intellectual property rights enforcement to market access to export quotas – and the United States needs to address these problems through tough negotiations. We must continue to convince China of why it’s in their interests to be a responsible member of international trade community – or else face sanctions by the World Trade Organization (WTO).
In 2000, Congress approved China’s WTO entry, receiving overwhelming bipartisan support, including backing from Sen. Jeff Bingaman and then-Sen. Pete Domenici, as well as from then-Rep. Heather Wilson and the late Rep. Joe Skeen. This important vote finally brought China into the world’s rules-based trading system in order to settle trade disputes.
Fast-forward 10 years. During the 2010 election, we heard U.S. Rep. Martin Heinrich suggest that had he been in Congress at the time, he would have voted against this legislation (at 18:19 in this video). With these words, especially when combined with the false attack ads against his opponent, Rep. Heinrich – intentionally or not – defined himself as one who might be hostile to building ties with the world’s second largest economy.
Instead of discussing how to make the United States more competitive, Heinrich and other candidates around the country played the China card and pandered to the electorate’s greatest fears.
Had Congress and President Clinton not done the right thing back in 2000, the United States would lack a powerful tool in its trade enforcement arsenal. In recent years, the mere threat of a WTO case forced China to change its ways. It’s important that the Obama administration continue the Bush administration’s policy of filing WTO cases against China when the evidence against them is clear and when our chances of favorable rulings are high. This will help keep China accountable to the United States and the 151 other WTO members.
What are not helpful are threats from Congress to impose tariffs on Chinese imports for China’s refusal to allow their currency – the yuan – to appreciate. While China should indeed allow for greater appreciation of its currency, those who expect our trade deficit with China to close will be sorely disappointed.
As the Wall Street Journal noted last year, the yuan appreciated by 21 percent between 2005-2008, yet the bilateral trade deficit actually increased. The only ones who Congress harms in this fight are U.S. consumers who would pay more for Chinese made goods.
The keys to U.S. competitiveness
While we have all experienced pain during this deep recession, the keys to our future prosperity lie in America’s ability to innovate and to continually adapt ourselves to the demands of the new economy. This means lowering the cost of doing business, reigning in government spending, streamlining our tax and regulatory policies to promote greater business certainty, investing in basic scientific research, getting results from our education spending, and opening markets around the world through free trade agreements – all to spur job creation here at home.
To create jobs for New Mexicans in this new decade, our ties with China shouldn’t stop with electronics and agriculture. As China’s energy demands grow with the explosive growth of their economy, New Mexico’s developing expertise in clean tech could prove fruitful for both sides of the Pacific. Technology collaboration could present New Mexico with huge export opportunities not only to China, but also to large emerging markets like India and Brazil as well.
So rather than invoking fear and blaming other countries for our problems, our leaders should instead level with the American people and begin to focus on the things that will help all U.S. businesses compete not only in China, but also around the world.
Estrada is the president of Global Growth Strategies, Inc., an international trade consultancy, and served as U.S. deputy assistant secretary of commerce for manufacturing in the George W. Bush administration.